Inside the big payments payout

Payment platform Adyen was founded in 2006 to modernise outdated systems to give consumers greater flexibility into how they can pay and merchant’s insight into how their customers like to shop.

Since then the company has boomed, catering to demands in the retail sector to provide their customers with an omnichannel experience and new regulations have allowed greater competition in the marketplace.

“The market is ripe for disruption,” Myles Dawson, UK country manager at Adyen tells Business Reporter. “There is so much change and so much disruption going on that there is a lot of opportunity to be a part of that.”

Regulations such as the Payment Services Directive have given opportunities for new players to enter the sector and provide services to consumers, which was previously dominated by the banks.

Over recent years a new breed of fintechs has emerged. Money transfer service TransferWise, the digital banking alternative Revolut and mobile only bank Monzo have all raised millions from investors wanting to capitalise on the new products and services they offer.

What these new entrants are doing is improving the payment experience for customers. “It is all about removing friction,” Dawson says. “You want to capture someone’s card details as quickly and efficiently as possible and then never ask them again.”

A couple years ago, Dawson explains, video streaming giant Netflix had poor results because customers were leaving, when their credit card expired, as updating the card numbers were too much of a hassle.

Now Visa and Mastercard have invented products, which allow the card details held by subscription services such as Netflix to automatically update if the customer gets a new one, so this problem can be avoided.

Dawson looks to Uber, however, as the perfect example of having frictionless payments. “You don’t even know you are paying,” he says. “You book a taxi and the payment happens behind that.”

Uber is one of Adyen’s customers. Adyen has also been working with retailers such as footwear retailer Schuh to make the payments easier for customers. At Schuh the focus has been on mobile point of sale (mPOS) to let shoppers pay anywhere on the shop floor - now 80 per cent of sales at their busiest London store are made this way.

A recent survey by the payment company found that an estimated £12bn of potential sales was lost in the UK due to long queues at checkouts. Dawson points out a lot of retailers are finding it hard because they are struggling to make things convenient for their customers to pay quickly when they feel like it.

“A lot of retailers are failing at the moment,” he says. “It is a common thing. There is no real experience for customers. You go into their stores and they are quite stale. We are seeing a lot of retailers look at how they can differentiate the store experience.”

Retailers want to know everything about their customer through the one platform, he explains. They want technology that can provide them with data about their customer’s preferences as well as software that can give them information about stock and a system.

At Schuh the shop assistants have an app, which can tell a customer if they have their shoe size in stock immediately, if not they can order it for the next day.

“It is very clear that the retailers that are delivering a very seamless omnichannel experience are the ones that are winning,” he says.

For example, Brompton Bikes has been working with Adyen to pair payment data with other types of data to help them better understand its customers. Adyen is using this insight to make better internal strategic decisions and give better service to Brompton customers.

Another big thing companies want from a payment company, Dawson explains, is one that can support them internationally. He says: “What we increasingly see is retailers going global. They want to give their customers a seamless consistent experience wherever they shop. Most tech companies or retailers now are born with global ambitions. They don’t want to be on a few high streets.

“They really want to think how they can expand out of the UK into Europe or the US into Europe. How do we get into Asia?”

Each country has different methods of paying for example - Alipay and WeChat Pay in Asia, while contactless is a big thing in the UK - and Adyen is ensuring retailers have the systems so they can adapt to the local market.

In the UK luxury sector, Dawson has been seeing lots of interest in using the Chinese payment methods. They have been popular in buying luxury goods in China and retailers in the UK now also want to integrate Alipay and WeChat Pay in their systems to cater for customers who want to buy this way.

Dawson believes one of the reasons Adyen has done so well is because of this customer centric approach and their culture of innovation.

“We listen to what our customers our looking for and where they want to go next,” Dawson says. “We build in line in that.”

“We will continue to see the friction disappear from that payment landscape in whatever format it takes,” Dawson says. He sees an eventual end to the clunky card terminals in stores and believes and a move towards using mobile tablets as payment devices. Shoppers will be able to pay for things when they want and how they want.

“It has got to end up like you feel like you are shoplifting,” Dawson says. “You pick up the five things you want. You walk out. The technology knows you and you get charged. It de-tags the security element.”

For the future he believes radio-frequency identification (RFID) will enable this to happen. He says: “The payment capabilities are already there. It is just about retailers pulling all of those capabilities together to enable you to do that.”